Put down as much as you can without depleting your emergency fund, but don't delay buying indefinitely waiting to reach 20%. In appreciating markets, buying sooner with 5–10% down often beats waiting years to save 20% — even accounting for PMI costs.
The three most common down payment scenarios
Most buyers land in one of three buckets. Here's what each looks like in practice on a $400,000 home at 6.75% interest:
$400,000 home at 6.75% — monthly payment by down payment
| Down payment | Loan amount | P&I payment | PMI added | Total monthly |
|---|---|---|---|---|
| 3% ($12,000) | $388,000 | $2,516 | +$323/mo | ~$2,839 |
| 5% ($20,000) | $380,000 | $2,464 | +$237/mo | ~$2,701 |
| 10% ($40,000) | $360,000 | $2,334 | +$150/mo | ~$2,484 |
| 20% ($80,000) | $320,000 | $2,074 | None ✓ | ~$2,074 |
The difference between 3% and 20% down is about $765 per month — roughly $473 in higher P&I plus $323 in PMI. Over a year that's $9,180. That's real money, but it needs to be weighed against what you'd gain by owning sooner in an appreciating market.
The PMI reality check
PMI (private mortgage insurance) gets a bad reputation, but it's worth understanding precisely. PMI is not permanent — on a conventional loan it automatically cancels when your balance drops to 78% of the original purchase price, and you can request cancellation at 80%. At typical home appreciation rates of 3–4% annually plus your regular payments, many buyers with 10% down reach the 20% equity threshold in 4–6 years.
How much PMI actually costs — $400,000 home
| Down payment | Loan amount | PMI rate | Monthly PMI | Annual PMI |
|---|---|---|---|---|
| 3% down | $388,000 | ~1.0% | $323 | $3,880 |
| 5% down | $380,000 | ~0.75% | $237 | $2,850 |
| 10% down | $360,000 | ~0.5% | $150 | $1,800 |
| 15% down | $340,000 | ~0.3% | $85 | $1,020 |
PMI is a cost, not a penalty. If putting 10% down instead of 20% lets you buy 3 years sooner, and home prices rise 4% annually, a $400,000 home becomes worth roughly $450,000 in those 3 years — a $50,000 gain that dwarfs the total PMI you'd pay in that period (~$5,400). The math doesn't always favor waiting.
When 20% down actually makes sense
The traditional 20% advice isn't wrong — it's just not universally right. Here's when it genuinely is the better choice: you're buying in a flat or declining market where appreciation won't offset PMI costs; you have the savings available without touching your emergency fund; you're staying in the home long-term and the lower monthly payment significantly improves your cash flow; or you're close to retirement and minimizing debt is a priority over maximizing returns.
The one rule that matters more than the percentage
Whatever down payment you choose, never drain your emergency fund to reach a round number. Buying a home with 20% down and zero savings in reserve is riskier than buying with 10% down and three months of expenses in the bank. The down payment percentage is less important than having financial breathing room after closing.
See your exact numbers
Run different down payment scenarios on your actual target home price to see the real monthly payment difference.
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Compare Mortgage Rates →Common questions
How much should I put down on a house?
As much as you can without depleting your emergency fund. 20% eliminates PMI and lowers your payment, but buying sooner with 5–10% down often beats waiting years to save more, especially in appreciating markets.
Is it better to put 20% down on a house?
Not always. 20% down eliminates PMI and lowers your monthly payment, but in rising markets, buying sooner with less down can outperform waiting to save more — even accounting for PMI costs. Use the Mortgage Calculator to compare scenarios on your actual numbers.
What is the minimum down payment on a house?
Conventional loans allow as little as 3% down. FHA loans require 3.5% with a 580+ credit score. VA and USDA loans allow 0% for qualifying borrowers.
What is PMI and how much does it cost?
PMI is private mortgage insurance, required on conventional loans with less than 20% down. It typically costs 0.5%–1% of the loan amount annually — on a $380,000 loan, roughly $158–$317 per month added to your payment.
When does PMI go away?
PMI on a conventional loan automatically cancels when your balance reaches 78% of the original home value. You can request cancellation at 80% equity. Use the House Affordability Calculator to understand your equity position from the start.